IPhone :: 4 Converting Higher Bit Rate Songs To 128 Kbps AAC

Got my 32 GB iPhone 4 yesterday and set up as a new device using the same playlist of music that I used on my 32 3gs. I check marked the box to convert higher bit rate songs to 128 kbps AAC just like I had in the past with the 3gs. With the 3gs it brought a playlist consisting of 4625 songs at 26.70 GB down to 17 GB. With the iPhone 4 synced it does the same in the drop down menu under devices then iPhone in Music then at the bottom it lists the playlist that I use, both read 4625 songs at 17 GB. At the summary page with the bar at the bottom it reads I have 23.29 GB of audio on the iPhone and unplugging going to settings then about it reads 4625 songs at 23.29 GB. So I only have 4.48 GB free when I should have around 9 or 10. I resynced twice to see if it would change with the same outcome, restored the device and called apple care with no answer on why it reads different.Going to the Apple Store tomorrow unless one of you has a solution to this.